Microsoft earnings today: Xbox 360, Windows Vista

Microsoft’s recently announced $1 billion charge for Xbox 360 malfunctions is expected to take its toll when the company reports financial results for its fourth quarter and 2007 fiscal year after the stock market closes today.

Analysts polled by Thomson Financial had been looking for Microsoft to post quarterly earnings per share of 39 cents, at the high end of the range the company projected when reporting results for its last quarter. However, a subsequent poll by Bloomberg, taking into account the Xbox 360 charge, showed analysts reducing the profit estimates, on average, by 7 cents a share.

As an aside, the Bloomberg story concludes with an eye-catching quote from Joel Hirsh, a Kovitz Investment Group analyst, who is bullish on the stock: “The beauty of this company for us is that other people are bored of it.”

Of course, Windows is still Microsoft’s biggest product, and this will be an interesting quarter to watch in that regard, because it’s the first one to reflect Windows Vista’s full availability. (The Jan. 30 retail launch was one month into the previous quarter.) A key barometer is the number of PC shipments, since Windows is primarily distributed through new computers. IDC yesterday reported that the figure was up 12.5 percent for the quarter.

To get a sense for the trend, here’s an updated version of our running PC shipments chart, with the latest number added.

That expansion in the PC market is roughly in line with the overall revenue trend that Microsoft said it was expecting for the quarter: $13.1 billion to $13.4 billion, or growth of 11 percent to 13.5 percent over the same quarter last year.

In the Windows results, one interesting statistic to watch will be the percentage of premium Windows Vista versions in the company’s mix of Windows sales. See this earlier story for background on that issue.

Another division that will get lots of scrutiny is Microsoft’s Online Services Business, which includes online advertising and other Internet-related results. Google also reports its quarterly earnings this afternoon, providing a high-profile (and challenging) benchmark for assessing Microsoft’s progress on that front.

Check back this afternoon for a summary and breakdown of the quarterly results. On a related note, the company will hold its annual meeting with financial analysts in Redmond next week, and I’ll be reporting from there, as well.